TaxPlace Celebrates One Year!

For $150 each year, TaxPlace offers replays of our seminars and webinars for review on your schedule. Many firms are using these replays for staff training. We also offer technical articles, news about the latest tax developments, and charts and forms that may be useful to your practice. As always, our niche is farm tax, but we offer much more. Check out TaxPlace and see what we have to offer. And remember, if you're a subscriber, your renewal date may be fast approaching. We're celebrating the one-year anniversary of the launch of TaxPlace on September 30! Thanks so much to our wonderful subscribers for your support of CALT and its work. We really appreciate it! We also welcome your feedback and comments about how we can serve you better.

Recent Case Review

Following is a sample of recent legal cases summarized on our website. See the complete collection here.

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September 2015

September 2015

In 2014, the U.S. Court of Appeals for the Eighth Circuit reversed the Tax Court and held that Conservation Reserve Program (CRP) payments paid to non-farmers are rents from real estate that are excluded from self-employment tax under I.R.C. §1402(a)(1). In so holding, the court gave no deference to an IRS Notice of Proposed Revenue Ruling, which, had it been formally adopted, would have reversed the longstanding position of the IRS that land conservation payments paid to non-farmers are not subject to self-employment tax. After the judicial rejection of the unofficial IRS position, the IRS did not issue the Revenue Ruling that would have obsoleted the older contrary rulings. Instead, the IRS issued a non-acquiescence to the court’s decision, sticking to its new (unofficial) position on the self-employment taxability of CRP payments and announced that audits would continue unabated – even in the Eighth Circuit.

The Conservation Reserve Program (CRP), originally enacted in 1985, is an agricultural program administered by the U.S. Department of Agriculture (USDA). Under the program, the program participant agrees to remove the land from active farming, implement a conservation plan, and seed the tract to permanent grass or other vegetative cover to prevent erosion and improve soil and water resources. The USDA, in exchange, generally shares the initial cost of the conservation measures and makes an annual rental payment (reported on a Form 1099) to the owner of the land. Continue reading here (free on TaxPlace).

We last updated you on the status of the Syngenta litigation in April. This month we’ll update you on several key developments that have occurred since April, primarily this month’s ruling on Syngenta’s motion to dismiss. We’ll also provide a brief roadmap as to possible next steps in this complex legal battle.

As discussed more thoroughly in past articles, Syngenta is facing legal complaints from thousands of plaintiffs across the country regarding its alleged premature commercialization of a genetically-modified (GM) corn trait. Although the product had been approved for sale in the United States and many other countries, it had not been approved for import into China at the time it was offered for sale in the U.S. In November of 2013, China rejected the import of all U.S. corn, asserting that it was tainted with traces of the unapproved trait. The average price of corn per bushel dropped by more than half between the summer of 2012 and the fall of 2014. A number of corn exporters, handlers, grain elevators, and farmers alleged that the drop in price was largely due to China’s rejection of U.S. corn. They asserted that Syngenta wrongly marketed the product before China had agreed to accept it. They began filing lawsuits in 2014, and the lawsuits continue in 2015. Continue reading here.

The new Clean Water Rule (often called the “waters of the United States” or WOTUS rule) went into effect August 28, 2015. Well, partially that is. The much-publicized Rule that establishes the formal definition of waters subject to regulation under the Clean Water Act went into effect in 37 states on August 28. Landowners in the other 13 states—which include North Dakota, Alaska, Arizona, Arkansas, Colorado, Idaho, Missouri, Montana, Nebraska, Nevada, New Mexico, South Dakota, and Wyoming—are still subject to the old definition of jurisdictional waters.

That’s because a federal judge in the United States District Court for the District of North Dakota entered a temporary injunction on August 27 blocking the Rule’s implementation. The judge ruled the following week, however, that the injunction applied only to those 13 states involved in the North Dakota lawsuit. The judge decided to narrow the application of the injunction because there were so many similar lawsuits pending. He cited competing “sovereign interests” and “judicial rulings” as the basis for his decision. To be successful, the other 18 states that have filed lawsuits challenging the Rule will have to convince the judges in their own jurisdictions to also block the Rule. Or one plaintiff will have to convince one of the courts considering the question to issue a nationwide injunction. So far, that has not happened, but the battle has just begun. Continue reading here.

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IRS Penalties for Failure to Timely File Partnership Return Upheld

In 1984, the IRS created a reasonable cause exception that a “small partnership” can utilize to avoid the penalties imposed for failure to timely file a partnership return. The exception has gained importance in recent years due to the increase in the penalties that are triggered by the failure to timely file a partnership return. Many farm and ranch partnerships might qualify for the reasonable cause exception. But, as a recent federal court case from South Dakota points out, the exception only applies if each partner of the small partnership fully reports their respective share of income, deductions and credits of the partnership on their timely filed income tax returns. Timeliness is the key. In addition, there is no blanket filing exemption for small partnerships. Continue reading here this bonus article from TaxPlace.

Tax Schools and Webinars--Sign Up Today!

It's hard to believe it's that time of year again, but our Farm and Urban Tax Schools are rapidly approaching! Sign up today to reserve your seat at one of our eight locations throughout Iowa:

Also, don't forget that we have a number of upcoming webinar options, including a week devoted to the Affordable Care Act and a week devoted to Repair Regulations. And as always, TaxPlace subscribers can review replays of these webinars at no additional cost. The ACA webinars are offered at a package discount of $200, include 7 hours of CPE, and cover a range of topics:

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CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.